Accounting 101 Movie: Secret History of the Credit Card NAME: DATE:

Answer the following questions based on the movie as provided in discussion board #4. 1. How did the lack of a usury law in South Dakota (a.k.a. as the Marquett Decision) affect the credit card industry? Credit card companies were arely sur!i!in" due to the ti"ht restrictions on interest rates# South Dakota "ot rid of the interest rate limit so anks in the state could increase the rate to make ends meet. $he Marquett Decision allowed for other companies not ased in South Dakota to make credit decisions in South Dakota in order to a!oid usury laws in other states. %. How many &mericans ha!e credit cards? 1'' Million )) Million

(. How many &mericans pay off their credit card ill in full e!ery month? $he mo!ie refers to this "roup as *dead eats+ .

'. ,- million of &mericans do not pay off their credit card ill in full e!ery month# is this num er startlin" to you? .r is this an accepta le num er? $his num er is !ery hi"h# / am a *dead eat+ and / can0t ima"ine the amount of de t these people are in. $his amount would e fine if it were efore the a olishment of usury laws ecause the interest rates and late char"es would e so much lower. ). &ccordin" to the mo!ie# what is the a!era"e credit card de t for an indi!idual? (12 of people pay off their credit ills in full each month so the remainin" 3%2 ha!e ills totalin" 41#1)%#--- to make the a!era"e credit card de t someone is in 41#---5 3. &re customers who make lower payments on their credit cards more profita le to the credit card companies? 6hy? 7es# ecause people will continue to pay interest# and the amount on the card will continue to increase and the people will e payin" more and more interest. 8. 6hat is meant y the term 9:ni!ersal Default0? :ni!ersal Default is if the customer makes a fault recorded y any company or ecomes a hi"her risk# e!en unrelated to the credit card company; the credit card company is a le to chan"e the terms of credit.

/n your opinion# is this fair? <o# it is !ery unfair ecause it has no effect on the credit card company and they are =ust lookin" for a reason to increase rates on people. $here is no way to defend from it# the customer has no other option to turn to ecause all credit card companies ha!e similar practices. 1. &re the credit card companies conductin" usiness in an ethical manner? >?plain your answer (use a second pa"e if necessary). <o# credit card companies are ein" unethical. $he credit card companies ha!e the hi"hest amount of consumer complaints and yet the ..C.C. does nothin" to allow the unfair practices. @ate payment fees of 4(, dollars are unfair# the %)2 interest rates are unfair# the companies are makin" more than McDonald0s and it0s ecause they are so "reedy. /t is unfair that these companies can trick its customers y enticin" them with low &AB rates and other fantastical claims and chan"e their policies with =ust a 1) day notice. Cor the ser!ice that is ein" pro!ided and what consumers are ein" char"ed for is ridiculous. 6ho needs a loan shark when you ha!e these companies makin" it impossi le to "et out of de t? / am a *dead eat+# this is my way at fi"htin" the companies# / will "et all of the rewards of ha!in" a credit card and none of the draw acks. / hope the ..C.C. steps up and strai"htens out the mess we are in.